Uber has sold its self-driving division to startup Aurora, offloading the long-term, costly play that has faced significant controversy.

It was announced earlier this week that with the ridesharing giant had sold its Advanced Technologies Group, which focused on self-driving technology, to autonomous vehicle startup Aurora, in a deal that values it at more than $5 billion ($US4 billion).

The company also sold its unprofitable flying taxi arm, Uber Elevate, to Joby Aviation.

Uber has been looking to reduce costs in the wake of a tumultuous year thanks to the COVID-19 pandemic, and has backed away from its long-term goal of developing and rolling out its own self-driving cars.

This had previously been a significant part of Uber’s planned future, but it has been looking to reach profitability and shed costs this year, with a focus on its core business of ridesharing and delivery.

As part of the deal, Uber CEO Dara Khosrowshahi will join Aurora’s board, while Uber will also be investing $539 million ($US400 million) into the startup, valuing it at $US10 billion.

Uber’s Advanced Technologies Group was previously valued at $US7.25 billion as part of a $US1 billion funding round in April last year, with investors including Toyota, DENSO and the Vision Fund.

Aurora was founded by a trio of veterans from heavyweight tech firms Google, Tesla and Uber.

Aurora co-founder and CEO Chris Urmson said that following the acquisition, the company is now ahead of the pack.

“With the addition of Advanced Technologies Group, Aurora will have an incredibly strong team and technology, a clear path to several markets and the resources to deliver,” Urmson said

“Simply put, Aurora will be the company best positioned to deliver the self-driving products necessary to make transportation and logistics safer, more accessible and less expensive.”

Following the deal, which is expected to be closed in the first quarter of next year, Uber and Advanced Technologies Group investors and employees will own a 40 per cent stake in Aurora, with Uber alone holding a 26 per cent stake.

“Few technologies hold as much promise to improve people’s lives with safe, accessible, and environmentally friendly transportation as self-driving vehicles,” Khosrowshahi said.

“For the last five years, our phenomenal team at Advanced Technologies Group has been at the forefront of this effort, and in joining forces with Aurora, they are now in a pole position to deliver on that promise even faster.”

Aurora’s existing investors include Hyundai, Amazon, Greylock and Sequoia.

Uber’s Advanced Technologies Group, along with “other technologies” saw a net loss of $US303 million in the first nine months of 2020, and recorded $US457 million in research and development expenses for the program.

The company has been looking to cut costs after a difficult year, and the sale of the self-driving unit marks a significant movement on this.

In 2018, one of Uber’s Advanced Technologies Groups vehicles hit and killed a woman in Arizona. An investigation by the National Transportation Safety Board found a number of software issues in the car had contributed to the fatal crash, but that it was ultimately the result of human error, and no charges were brought forward.

In September this year, the backup driver of the Uber vehicle was charged with negligent homicide.

The investigation found that Uber had “inadequate safety risk assessment procedures” and “ineffective oversight of vehicle operators”, which contributed to the crash, and that the software failed to identify the presence of the woman near the car.

Following the accident, Uber suspended all of its testing on public roads until the end of 2018.

The investigation also revealed Uber’s self-driving vehicles had been involved in 37 crashes before the fatal one in early 2018.